California leads the nation in office construction value, followed by powerhouse states of Texas and New York, says a top 10 list published in “Economic Impacts of Commercial Real Estate, 2015 Edition.”
Does your state rank? Here’s the rundown and outlooks on what’s happening today:
- California – The early recovery in the office markets is tied to technology, energy, trade, education and health care, says Marcus & Millichap, led by the tech hot spots of San Francisco and San Jose. And as high-tech employers swell their employee ranks, the vacancy rates in the Bay Area contract even more and reflect the highest declines in the nation.
- Texas – Business-friendly Texas is experiencing tremendous office demand, as well as skyrocketing rental rates. JLL says San Antonio’s rental rates have jumped 30.0 percent since 2005 with a total vacancy rate at its lowest point since 2008.
- New York – Three New York office markets – Midtown South, Downtown and Midtown – continue to lead the charge in the state, accounting for 4.0 MSF, or 78 percent, of the 5.1 MSF delivered already this year, says Colliers.
- Pennsylvania – Lack of space in Philadelphia’s most sought-after markets are driving up rents and resulting in increased demand in nearby Allentown and Camden County, says Colliers. Development of Philadelphia’s largest office projects – the Comcast Innovation and Technology Center and FMC Tower at Cira South – continue, with completion dates in 2016-2017.
- Iowa – In West De Moines, development of new office space is strong with several Class A buildings in progress and a 1970s warehouse being converted to competitive office space, says CBRE | Hubbell Commercial.
- Massachusetts – The Bay State is among a handful of markets that will account for roughly half of the 67 million square feet of space slated for completion nationwide in 2015, says Marcus & Millichap.
- Illinois – JLL says demand for office space in Chicago is increasing, with nearly 500,000 square feet of East Loop leasing activity in the last year.
- Washington – CBRE says tech and traditional space are driving demand in Seattle, with Facebook, Oracle, Alibaba and Dropbox all expanding and taking up new square footage.
- Florida – Marcus & Millichap says Florida’s markets continue to strongly perform, with dropping vacancies and increasing office demand.
- Virginia – JLL reports that the majority of Northern Virginia’s construction activity continues is in submarkets along the Silver Line of metropolitan D.C.’s Metrorail. Of the five office buildings under construction in Northern Virginia, two are in Tysons and one is in Rosslyn.
This is part of a series of informational posts on the Research Foundation’s valuable report, “Economic Impacts of Commercial Real Estate, 2015 Edition.” Report data was provided by Dodge Data & Analytics; the report was written by Dr. Stephen S. Fuller and published by the NAIOP Research Foundation in June 2015. Download the full report and check back for more analysis and excerpts.
Kathryn Hamilton, CAE, is Vice President for Marketing and Communications at NAIOP Corporate.